East Africa Pharmaceuticals and Healthcare Report Q3 2012

The better-regulated markets of the Gulf Cooperation Council (GCC), South Africa and Israel remain the most rewarding and least risky for drugmakers operating in the Middle East and Africa (MEA). However, these markets are rapidly approaching maturity and are expected to grow only in the mid-to-high single digits. As pharmaceutical companies look to enter markets with higher potential, they will likely turn their attention first to the Gulf Levant and then North Africa, where population demographics, the regulatory framework and macroeconomic factors will facilitate growth.

Sub-Saharan African (SSA) countries remain the final frontier in terms of investment because the risks in these countries are higher and at present the rewards are lower. However, their appeal lies in the long term and the companies that establish their brands sooner rather than later will benefit most. Generally speaking, BMI has preferred the Southern African region over East Africa, which has recently been overtaken in attractiveness by West and Central Africa.

Change At The Top And Bottom In Q312, after two quarters away from the top spot, the UAE has returned to being the most attractive market in BMI's MEA Pharmaceutical Risk/Reward Ratings (RRR) matrix. The reason for the return is an increase the country's medium-term pharmaceutical market growth forecast, which has caused an increase in the UAE's industry rewards score. The higher forecast is primarily due to two factors: the lack of new price-containment measures on pharmaceuticals, which could have slowed market growth beyond 2012, and the increase in historic health expenditure data that undermine the case for the development of a two-tier healthcare market for poorer expatriates.

At the bottom of the table there has also been some movement, with Sudan slipping below Côte d'Ivoire in terms of attractiveness for drugmakers. The continued deterioration in Sudan's political environment, which looks to be heading towards conflict between the North and South, is likely to drive its score even lower in Q412. Furthermore, with Côte d'Ivoire returning to some semblance of stability and the removal of the vastly ineffectual universal free healthcare, its RRR score could improve in future.